Background Information and Opinions
As of Thursday, Johnson & Johnson had filed for Chapter 11 bankruptcy defense via a company it had fashioned to handle indictments that its talc-based goods were cancerous. In a way that is fair to all stakeholders, the firm stated after filing its Chapter 11 petition for bankruptcy protection. As part of its bankruptcy plan, J.&J. said it would form a $2 billion trust to cover whatever debts the bankruptcy court determined the subsidiary owed. In addition, the subsidiary was allotted a portion of the royalty income to cover any future expenses. Defending Johnson & Johnson in court, Beasley Allen Law Firm attorney Andy Birchfield called the company’s bankruptcy petition an effort to hide behind bankruptcy.
Talc-based goods, notably well-known baby powders, have long been a source of controversy for the corporation. Last year, Johnson & Johnson ceased distributing the product in North America because of hundreds of lawsuits brought by consumers who allege that the company’s products are linked to cancer. The company’s subsidiary, LTL Management, will now face the weight of the allegations. Johnson & Johnson or its affiliates made no bankruptcy filing; they intend to conduct their companies as standard, it stated. According to Jiménez (2021), LTL’s chief officer of legal matters, John Kim, declared that the junior company was “confident all stakeholders would be treated equally throughout this process” because of the parent company’s financial support. Conceding blame “isn’t the point,” Johnson & Johnson stated in its submission, “but rather a method to reach a fair and efficient settlement” (Jiménez, 2021). Thus, the company is prepared to admit fault and work towards a mutually beneficial solution.
Our Opinions
Since its inception, the corporation has had several victories and defeats in court. After a Missouri appeals court discovered that the industry’s talcum merchandise, predominantly its baby powder, triggered ovarian cancer, the establishment was condemned to pay $2.1 billion in compensations. Asbestos in the company’s talcum-powder goods was responsible for rising ovarian cancer in 22 women and their relatives in 2018 when the company was ordered to pay $4.69 billion in compensations. In a meeting call with stakeholders on Tuesday, Joseph Wolk, the CFO, restated that the corporation dropped talc-based baby powder goods due to safety concerns. Another statement from LTL announced that J&J had agreed to give the new entity $2 billion in additional capital to cover potential compensation for asbestos found in infant powders. A Beasley Allen advocate in lieu of women who have charged J&J said that this lawful move might make it expressively more problematic for his clientele to receive compensation.
Critics Opinion
Critics claim the company’s move is just the latest example of a rising trend: affluent people and organizations filing for bankruptcy to avoid being sued. According to the American Association for Justice, which is composed of trial attorneys, the move by J&J was disgraceful and urged legislation to prevent future abuses of this kind. Recent months have seen a growing chorus of concerns from legal experts and members of Congress from both parties. Consumer support administrations have also raised worries about using bankruptcy benches by wealthy and dominant corporations to avoid lawsuits.
“Bankruptcy grifters” such as Johnson & Johnson were referred to by Simon, a law professor at the University of Georgia. She said these businesses and organizations “incur a fraction of the accompanying costs” of Chapter 11 protection. Lax bankruptcy rules, according to critics, allow companies to “venue shop,” taking to file for bankruptcy in state districts that are seen as favorable to businesses. However, she did say that if the bankruptcy court rules in favor of the victims, the corporation might be liable for significant compensation to them. While LTL’s bankruptcy file is being reviewed, Johnson & Johnson has requested a federal bankruptcy court to delay work on talc-asbestos allegations.
References
JimĂ©nez. J (2021). Johnson & Johnson subsidiary seeks bankruptcy protection to handle talc product claims. The New York Times – Breaking News, US News, World News and Videos. Web.